Allstate to Raise Rates in Texas Despite Opposition from State
Allstate will raise its homeowners' insurance rates despite a state order not to and a request by the state's consumer advocate to fine the company for each policy it renews at the new rate.
"We continue to believe that this is a competitive and actuarially justified rate,'' company spokesman Bill Mellander said. "This is about giving us a strong competitive position in the marketplace where our agencies can be providing homeowners with an accurately priced product that serves their needs.''
On Aug. 20, Texas Insurance Commissioner Mike Geeslin ordered Allstate not to implement its statewide rate hike of 5.9 percent and an average 2.1 percent on top of that for homeowners in some coastal counties where customers can buy windstorm insurance from the insurer.
The Office of Public Insurance Counsel, which represents consumers before regulators, has asked the Texas Department of Insurance to impose a $25,000 fine for each policy Allstate renews.
The company has said it needs the increase because of rising construction costs and expensive reinsurance, which the company buys to help cover claims after a catastrophe. Mellander also said the company has followed the law in implementing its rates.
A spokesman for the Texas Department of Insurance said he could not speculate on how the state would respond.
State regulators have also ordered the company from now on to file its rates for approval before implementing them.
The Office Public Insurance Counsel also wants state regulators to disapprove rates Allstate currently charges homeowners under Allstate Texas Lloyds and Allstate Fire and Casualty.
Combined, the companies have 917,000 policyholders in Texas.
Public Insurance Counsel Director Rod Bordelon said the company overstated its projected losses, expenses and profits in order to inflate its rates.
Allstate increased rates statewide an average 5.6 percent in 2006 and is appealing a state district judge's order this year to refund $56 million in premiums in relation to rates it charged in 2004 and 2005.
Last month, the company withdrew a proposed 6.9 percent rate hike when regulators signaled they wouldn't approve it.
Information from the Houston Chronicle: www.chron.com
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